Marital Status and Older Women’s Economic Well-Being: Income, Consumption, and Leisure before and after Retirement

Yanyuan Wu, University of Chicago

This paper examines how older women fare before and after retirement by marital status. It demonstrates how different benchmarks on economic well-being can lead to different views on how older women fare, and the findings in the aggregate mask a more complex structure across different marital status groups. The paper concludes that although income drops substantially at retirement, older women are able to sustain consumption. The decline in money expenditure can be explained by a standard model of household consumption augmented with Becker home production. The differences in the changes of consumption expenditure and time spent on housework between the married and unmarried older women at retirement further support the power of time/expenditure substitution mechanism. Additionally, time use data indicates that time spent on leisure activities rises significantly. The evidence presented in this paper doesn’t support the claim of a decline in economic well-being with retirement status for older women.